Despite a decision by Burma’s Parliament to postpone the awarding of telecoms licenses to two foreign companies or consortia, the body overseeing the bidding process says the license winners will be announced as planned on Thursday according to The Irrawaddy.

Set Aung, chairman of the Telecoms Tender Committee and deputy minister for national planning and economic development, said the committee had already selected two winners out of 11 bidders and would publicly announce them on Thursday.

“We are going to announce the winners today, he told The Irrawaddy on Thursday morning.

“We have to treat international and local companies fair and square,” he said. “If not, we will be disgraced in the international community. I agree that we should favor local companies, but we shouldn’t take the wrong direction in doing so.”

Burma’s lower house of Parliament said on Wednesday that the licensing awards would be delayed until lawmakers passed a new telecommunications law, which is still in the drafting process. This move in Parliament to delay the awarding came after a member of Parliament’s telecoms committee submitted an emergency statement to lawmakers urging them to favor local joint ventures in the selection of telecoms operators.

Earlier story

Telecom companies waiting to bid and enter into the Myanmar market, was puzzled by last minute political uncertainties as Myanmar’s lower house of parliament agreed on Wednesday to delay the awarding of the two telecoms licenses until a new telecommunications law comes into force.

It is not clear whether the lower house of parliament has the authority to delay the procedure, which is overseen by the Telecommunications Operator Tender Evaluation and Selection Committee (TOTSC).

“A lower house lawmaker tabled an important motion suggesting that choosing the two telecoms operators should be postponed till the new telecoms law is enacted,” Thein Nyunt, a lawmaker and chairman of the New National Democratic Party, told Reuters, adding that no objection was raised in parliament.

The winners of the hotly contested bid were supposed to be announced today (Thursday 27 June), and officials were unable to say if that would change.

The current mobile penetration in the country with 60 million people is put at no more than 9 percent. The government hopes it will be able to push that rate to 80 percent within three years by opening up for foreign entries into the industry.

However, Huawei who has built 40% of the towers in Myanmar, which amounts to 1500 across the country, said it has built the towers mostly in Yangon, Mandalay and Naypyidaw.

According to official figures released in mid 2012 the country had:

857 Base Transceiver Stations (BTS) for 1,654,667 local GSM mobile users,

188 BTSs for 225,617 local WCDMA mobile users,

366 BTSs for 633,569 local CDMA-450 mobile users,

193 BTSs for 341,687 CDMA-800 mobile users.

The 11 shortlisted companies are:

Axiata

Headquartered in Kuala Lumpur, Malaysia and Asia’s third largest mobile service company. Operating in Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia.

Bharti Airtel

The world’s 4th largest telecom company, with a presence in 21 countries across Asia and Africa. Headquartered in India and has a solid experience working in market similar to Myanmar.

Digicel

A private Jamaica based telecom company with operations mostly in the Caribbean and Central America. Digicel are teaming up with Quantum Strategic Partners and YSH Finance, a joint venture between Yoma Strategic Holdings and local company First Myanmar Investment (FMI). The consortium announced it will invest about US $9 billion if it wins the tender.

KDDI

Japan’s second largest telecom company with operations in 28 countries. Alongside Japanese conglomerate Sumitomo Corporation, KDDI has two Myanmar partners. Myanmar Information and Communication Technology Development Corporation (MICTDC) and A1 Construction Company Ltd. With the variety of players in its consortium, KDDI is seen as a strong contender, being backed up by the Japanese government’s decision to write off billions of dollars of Myanmar’s debt.

Millicom International Cellular S.A

A Luxembourg based company, with operations in Latin American and Africa through its brand “Tigo”. Millicom/Tigo is no stranger to the region; it ran the Tigo Laos/ Millicom Laos before it was sold to Beeline.

MTN Consortium

(MTN Dubai, M1 Limited and Amara Communications) have also joined hands with Myanmar partners. MTN is one of the world’s largest mobile operators, with nearly 200 million subscribers across Africa, Asia and the Middle East. The South Africa-based multinational has teamed up with M1 Limited, Singapore’s second largest mobile operator and Myanmar’s Amara Communications, a subsidiary of IGE Company Limited.

France Telecom Orange and Marubeni.

The Paris and NYSE-listed telecoms operator has a presence in 32 countries and is in partnership with Marubeni, a Japanese conglomerate with operations in 65 countries and a total of 120 offices. The technical expertise and experience in various telecom markets makes them a strong contender however their lack of a local partner could weaken their chances.

Qatar Telecom (Ooredoo) WINNER

Qatar’s national telecom company (formerly QTel) has operations in 17 markets across the Middle East, North Africa, and Asia. They announce that they would spend US $15 billion in Myanmar if it is chosen for a license, the largest sum so far announced in the tender. It also claimed that it’s networks will reach 90% of the population in Myanmar within 2 years through the construction of 10,000 base stations.

SingTel Consortium

(SingTel, Kanbawza Bank and MTel) Singtel is one of Asia’s largest operators with a presence in Indonesia, the Philippines, Thailand and Bangladesh as well as Singapore and Australia. The strong ties between Singapore and Myanmar is seen as an huge advantage as well as their choice of partners. SingTel is partnering with Myanmar’s largest bank Kanbawza Bank (KBZ), who has strong connections and involvement in airlines, construction, and mining industries. Myanmar Telecom Company (MTel), is a local company involved in telecoms infrastructure and construction.

Telenor WINNER

State-owned Norwegian company with operations in 11 markets. Telenor has chosen not to work with a local company, probably because its State-owned status makes partnerships with local companies difficult. However the Norwegian government enjoys a good relationship with Myanmar.

Viettel

The military-owned telecommunication provider of Vietnam. Viettel has a presence in seven countries including Laos and Cambodia. Economic and political relations between Vietnam and Myanmar have improved in recent years, with major Vietnamese investors looking at moving into Myanmar. However having a foreign military-owned company involved in Myanmar’s telecommunications sector might be an issue.

Vodafone Group and China Mobile Ltd recently dropped their bid for a license, stating that it did not meet their “internal investment criteria.”

Opportunities, Risks and Challenges

Myanmar, is located in one of the fastest growing regions in the world. But the country faces monumental development challenges. Lack of paved roads and many with pot holes several meters wide. Electricity blackouts are routine. Real estate prices in the commercial part of the capital, Yangon, rival New York City due to limited supply and a surge in demand brought on by the country’s emergence from isolation.

The communications industry, long-neglected by the country’s military rulers, is in need of a complete overhaul. Up until a few years ago, the cost of SIM cards could reach $2,000.

” There are tremendous advantages to starting from scratch. You all will have an opportunity to skip all the previous … generations of technology,” Eric Schmidt, executive chairman of Google told a group of young business leaders during a visit to Yangon earlier this year.

“You’ll have fiber optic cables, 3G and 4G networks that will connect to smartphones. You will literally leapfrog 20 years of difficult to maintain infrastructure.”

However, it is worth pointing out that while the potential returns for the winners of the bidding are staggering, so are the risks as companies are entering the Myanmar market while process is still taking place.

Will regulation and ownership rights develop? Will the political reform evolve? Can the government handle the fragile peace between ethnic groups? What role will the state-owned telecom operator, Myanmar Posts and Telecommunications, be playing?

The government insists a new industry regulatory will take over within the next few years, but the job is still in the hands of the Ministry of Communications and Information Technology.

A taste of possible issues came to light late Wednesday when the lower house of parliament unanimously agreed that the telecom bill setting the legal framework for the industry was not yet approved, thus the decision about the two new mobile licenses should be delayed.

According to latest GfK findings, growth momentum in Thailand started picking up at the beginning of 2012 with consumers in the country spending over USD 800 million on smartphones in the past year.

Although basic feature phones continues to make up the larger proportion of Thai consumers’ handsets purchases, sales volume has dropped by over 11 percent compared to 2012.

According to Wichit Purepong, Managing Director for GfK in Thailand “Consumers demand for handsets has been growing successively every quarter since the second quarter of 2012. This growth has been purely contributed by smartphones, which registered the greatest spike of 24 percent in volume sales in the first quarter of this year over the quarter before.”